Belgrade airport CEO arrested on suspicion of signing damaging business deal with Wizz Air

By bne IntelliNews July 2, 2014

Serb police arrested on Wednesday, July 2, the director general of Belgrade’s Nikola Tesla Airport on suspicion of signing a controversial deal with low-cost carrier Wizz Air, which resulted in some EUR 2mn damage for the airport operator, state broadcaster RTS informed.

Velimir Radosavljevic has been therefore accused of abuse of office and will remain in custody.

According to the report, the police explained that Radosavljevic is accused of signing a memorandum of understanding with Wizz Air back in January 2010, which awards the air carrier with lower fees for using the airport services, including a 20% discount on passenger service fees – even though such benefits were not allowed to any airliner at the time.

In fact, these beneficial terms for using the airport services were introduced much later – in December 2013, thanks to a government decision aimed at spurring the development of the domestic air transport market. Furthermore, the favourable terms were granted only under certain conditions, which however Wizz Air did not meet, the police claimed.

Despite this, the Hungarian low-cost carrier started using the Belgrade airport services at lower prices already as of June 2010 based on the above mentioned memorandum. The Nikola Tesla airport and Wizz Air actually signed in March 2011 a contract for providing airport services, which validated the memorandum. This contract officially granted Wizz Air discounts on all grounds for airport services and passenger service fees for the period of its validity.

The police say that Radosavljevic thus enabled Wizz Air to benefit some RSD 207.4mn (EUR 1.8mn) to the detriment of the airport operator. 

In early April, Serbian media reported that Wizz Air is cancelling its routes that connect Belgrade with Oslo and Brussels and is reducing the number of flights to other destinations from the Serbian capital because of a significant increase in the fees charged by the Nikola Tesla airport operator.

Wizz Air was quoted as saying it has decided to reduce the number of Belgrade flights after the airport fees jumped 40%, making the Belgrade airport the most expensive one in the airliner’s route network. Furthermore, the company said it will relocate one of the two Airbus A320 planes it keeps in Belgrade to the airport in the Latvian capital Riga.

Wizz Air‘s executive vice president John Stephenson back then was quoted as saying that the company was ready to increase its presence in Serbia but was discouraged by the Belgrade airport’s strategy, which instead of supporting low-cost carriers is “unfairly protecting” Etihad’s local unit Air Serbia that strives to build up a dominant position.

Belgrade’s airport operator is controlled by the Serbian state, which also owns 51% of Air Serbia*. The state held just over 83% in Nikola Tesla at end-2013. The airport’s shares on the Belgrade bourse closed up 2.61% to RSD 590 on July 2 after staying unchanged a day earlier.

* Air Serbia is managed by UAE’s Etihad. It completed in March the takeover of the remaining 49% in Air Serbia. Ex-Yu Aviation News reported in March that the European Commission launched a formal investigation into Etihad’s shareholding and control of several European airlines, including Air Serbia, aiming to check whether its investments are in line with EU rules on ownership and effective control of EU airlines.

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